Lord Davies of Oldham: My Lords, as announced in the Budget 2006 and reiterated in their recent Pre-Budget Report, the Government are committedto a business tax system that supports business competitiveness and operates fairly across businesses and sectors. The Government have undertaken extensive engagement with business in recent months to understand better its concerns in relation to tax and to ensurethat we are addressing them. The recommendationsof the Varney review of HMRC links with large business, published on 17 November, will improve the responsiveness of tax administration to the needs of business.

Baroness O'Cathain: My Lords, in his waking hours of the morning or the middle of the night, will the Minister contemplate what has actually happened in the Republic of Ireland? Corporation tax has been reduced to 12 per cent, the growth rate has not fallen below 6 per cent since, and the annual value of GDP per head of the population is some £10,000 higher than in the UK—all from a much less favourable position several years ago? Is the noble Lord saying that that is just a mirage?

Lord Willoughby de Broke: My Lords, I am grateful to the Minister for that admission thatthe Government do not know what the cost will be of this huge financial services action plan. Do the Government accept that London is the biggest and most successful financial services centre, not only in Europe but in the world, which earns the Exchequer about £40 billion a year? Do they further accept that the 22 directives in the financial services action plan risk fatally undermining London's competitive edge? If they do, will they seek a derogation from those directives to maintain London's global supremacy in financial services?

Lord Truscott: My Lords, there are a numberof reasons why the level of individual insolvencieshas increased, including the availability of credit, unemployment, other economic factors and specific reasons relating to the individuals concerned. I do not accept the noble Lord's point that legislation has led to that increase in insolvency; after all, the number of those in insolvency has risen in Northern Ireland and Scotland, where people have not been affected by the same legislation.

Lord Truscott: My Lords, the noble Lord has a valid point that far more needs to be done to educate people about indebtedness and how to deal with it. The Government are already doing a lot in that area; for example, we are giving grants totalling £47.5 million for advice agencies to hire and train more than500 new debt advisers. We are giving an additional£21 million-plus to Citizens Advice this year to help it to provide support services and an extra £1 million to the National Debtline. In addition, we are working to ensure that we provide information and advice to young people—so we are doing a lot in this area, which will benefit hundreds of thousands of people.

Lord Teverson: My Lords, there is great concern about the potential misselling of IVAs, individual voluntary arrangements, and the distress that that will cause many in the future. How do the Government view IVAs?

Lord Stoddart of Swindon: My Lords, does the noble Lord recall the wise words of a former General Secretary of the Labour Party, Morgan Phillips, that the Labour Party owed more to Methodism than to Marxism? The Methodist regime believed in thrift, decency and community rather than in capitalism and market forces.

Baroness Wilcox: My Lords, I return to this issue one more time. I noted that in Committee I was dissatisfied with the Government's response. Having reread the debate, I consider that it is right to bring this matter back.
	Put simply, this amendment would ensure that when the National Consumer Council publishes a report to give to the Secretary of State, it will also make a copy available to the public. The noble Lord, Lord Borrie, suggested that would infringe the powers in what is now Clause 17, but was Clause 16 on Report.
	I direct noble Lords and the Minister to the exact wording of Clause 17, which states:
	"The Council may publish any report prepared under this section".
	Any report published under that section may not necessarily cover a report prepared for the Secretary of State, as preparing reports for the Secretary of State does not fall within the scope of the NCC's functions as described in Clause 17. Indeed, and rather ironically, the National Consumer Council's only statutory duty to report is to the consumer, in Clause 10. Clause 17 does little more than say that the National Consumer Council can publish reports if it wants to, but it has no duty to publish those reports when reporting to the Secretary of State.
	Indeed, I suspect the real reason behind the Government's resistance is that the Secretary of State can commission a report far wider in scope than that available to the National Consumer Council to report to consumers. Under Clause 18:
	"The Secretary of State may direct the Council to prepare ... a report in respect of any matter specified ... which relates to consumer matters".
	The scope of an average National Consumer Council report to the humble consumer comprises,
	"information about consumer matters, information about the views of consumers on consumer matters and information ... as may be prescribed by the Secretary of State by order".
	The second substantive point is that this amendment does not seek to proscribe the National Consumer Council's publication. Rather, it seeks to ensure that there is direct communication and thereby accountability of the information going between the National Consumer Council and the Secretary of State. The National Consumer Council is not a government department, and information transferred from it to the Secretary of State should emphatically not be treated as classified, as it is under the Bill as it stands. This is a serious point, and I hope the Minister will be able to take it on board even at this eleventh hour. I beg to move.

Lord Truscott: My Lords, I am grateful to my noble friend Lord Borrie for his clear exposition, with which I wholly concur. We had a lively and helpful debate on this amendment on Report. From that debate and the earlier debate in Committee, it is clear that the intention behind the amendment is essentially the need for transparencyin the Government's dealings with the new council and public accountability. I can again confirm our wholehearted support for these intentions.
	The discretion afforded to the Secretary of State by Clause 18 not to publish a report prepared for him by the council would be necessary to deal with particular circumstances, such as when the report contained sensitive information that was commercially confidential or price sensitive, as my noble friend Lord Borrie outlined. Such information might be necessary to support the recommendations in the report. However, a requirement on the Secretary of State to publish every report submitted to him might create a deterrent effect on external experts or stakeholders who might be reluctant to provide advice because it might be disclosed. Such advice may be shared with the council only on the understanding that it was not to be made public. Requiring the Secretary of State to publish every report submitted to him under Clause 18 could therefore deter the provision of useful or important information to aid the preparation of the report bythe council, to the detriment of the quality of the final report and the subsequent advice provided to the Secretary of State. I cannot believe that that isthe intention of the noble Baroness, Lady Wilcox, or the noble Lord, Lord Razzall.
	A key consideration here is that there may be good reasons why the content of reports prepared and submitted to the Secretary of State to aid the decision-making process should not be published. While we envisage that the Secretary of State will generally wish to publish any report submitted to him under Clause 18, it is important that this discretion is retained in order to allow for what is appropriate in each case.
	If the council determines that the issue of the report is one of interest to consumers more generally, as we envisage will generally be the case, Clause 18 does not prevent the council from exercising eitheror, indeed, both of the powers under Clause 17 or Clause 19(2) to prepare and publish reports or advice and information for the purpose of bringing issues of importance to the attention of the consumer. A report prepared under the powers in Clause 17, for example, that covered the same issue as a report prepared under Clause 18, could be published without information that was considered to be sensitive and in a format that may be more in line with the needs of consumers.
	In light of my explanation and the fact that we have discussed this on several occasions, I hope noble Lords will understand why the Government do not feel able to accept this amendment.

Baroness Wilcox: My Lords, I shall speak also to Amendments Nos. 3 and 4. I am pleased to be able to revisit this issue with what I hope is an improved set of amendments. Amendment No. 2 would place a duty on regulators in Clause 43 to make regulations to require their providers to have in place and operate effective internal complaints handling procedures. The amendment is complemented by Amendments Nos. 3 and 4 to Clause 46, which connect the proposed new provision in Clause 43 to the list of information that a supplier can be required to provide to the consumer. Overall, the amendments would ensure that regulated suppliers were required to have internal complaint-handling procedures and that the regulators could require the suppliers to communicate to their consumers how these procedures work.
	I do not need to rehearse the arguments that I made both in Committee and on Report in this House. These amendments would put the consumer's response to services at the heart of the consumers Bill. Complaints are not only one of the most accurate measures of how successful the delivery of a service has been but are a vital avenue for the consumer, especially with respect to essential energy and postal services.
	I read with interest the words of the noble Lord, Lord Whitty, on Report. I had hoped that, had he been here, he would have been able to support the slight change in the wording, which he suggested. I agreed with him wholeheartedly when he said:
	"This Bill will not work unless effective mechanisms are in place to ensure that the companies meet the requirements to handle complaints far more effectively than, frankly, either the post or energy sector does at present".—[Official Report, 30/1/07; col. 189.]
	I was pleased that the Government came back with amendments that began to acknowledge the need for a best-practice element in the regulation of energy and postal providers. I hope that today the Government can realise the full potential of the Bill by accepting these amendments. They have the opportunity to send out a message that shows that the Bill will provide an incentive for a new culture in which responsible business practice empowers the consumer. It would be a great shame to miss such an opportunity. I beg to move.

Lord Truscott: My Lords, I listened with great interest to the arguments made by the noble Baroness, Lady Wilcox, and others on this issue on Report. I agreed to give it further consideration, as the importance of the need for service providers to deal effectively with consumer complaints is in no way in doubt.
	The position that we have adopted is to give regulators the power to make regulations to prescribe complaint-handling standards that would be binding on suppliers. We took this approach because we believe that a sectoral regulator is best placed to take a view on what is appropriate and necessary within its own sector. These provisions will need to be adaptable and will need to be applied on a sector-by-sector basis, with each regulator being able to take a different approach if required, to meet the needs of each sector.
	On Report, the noble Baroness cited the arrangements in place in the financial services sector. The basisof the approach in that sector stems fromparagraph 13(4) of Schedule 17 to the Financial Services and Markets Act 2000, which states that the Financial Services Authority may make rules requiring a company to establish such procedures as it considers appropriate for the resolution of complaints that may be referred to the ombudsman scheme.
	In respect of this legislation, the Financial Services Authority has determined and published the procedures that each company must have in place for the investigation and consideration of complaints. That document sets out a general requirement on firms to operate appropriate and effective internal complaint-handling procedures, and outlines in some detail what that should look like.
	I believe that the intention behind the approach taken in the financial services sector is entirely consistent with the approach that we have set out in the Bill—the need for businesses to handle complaints effectively in the first instance. The Financial Services and Markets Act 2000 confers a power, not a duty, on the regulator to prescribe complaint-handling procedures to be followed by businesses in that sector. The Financial Services Authority has made use of that power to require regulated businesses to adhere to requirements relating to complaint-handling procedures.
	The Bill confers on the regulator a power to prescribe complaint-handling standards. We believe that that is sufficient to ensure that complaints are handled effectively, and it is also in line with the Government's better regulation principles, as it allows each service provider to meet those standards in the way that each provider determines is most suitable for the company, rather than prescribing the procedures that must be followed.
	Regulators are established as independent bodies and must be allowed to function accordingly. We must take into account the simple fact that a regulator has a duty to protect consumers in its sector and totake consumers' interests into account in its decision-making. With the introduction of redress provisions, which industry will have to fund—an important consideration—information about the nature and volume of complaints will be placed in the public domain.
	The existence of a redress scheme to which service providers are required to belong by statute is something new for the sectors concerned here. The budgets for the consumer bodies in the energy and postal services sectors are negotiated directly with Government, and include funding for the handling of complaints. This has provided little incentive for some service providers to give the matter the appropriate attention. With the introduction of these measures, service providers will have to do more to resolve disputes first-hand. Typically, the funding structure for redress schemes is based on a case fee for each complaint referred to the scheme, and that will act as an incentive for service providers to take complaint-handling more seriously. This new statutory requirement will encourage industry to act in a different way and review its internal procedures for handling complaints.
	Regulators are tasked to ensure that the market operates effectively. In relation to complaint-handling, we are adding to their existing armoury and giving them the power to make regulations to prescribe complaint-handling standards that would be binding on providers. A regulator would be failing in its duty to consumers and would be accountable for any decisions not to take appropriate action in the face of any compelling reasons to do so.
	We believe that the vast majority of businesses want to act responsibly. The pressure to attract and to retain customers is a powerful and effective incentive on business to act with integrity and responsibility. While we understand the motivation behind the amendment—I listened carefully to the points made by the noble Lord, Lord Razzall—we feel that the approach that we have chosen is in line with better regulation principles. I hope this explanation provides some reassurance of the merit of our approach.

Lord Truscott: My Lords, the noble Earl, Lord Caithness, will recall that on Report I undertook to consider this matter further. I have now reviewed the arguments, but have concluded that this course isnot possible under this Bill. I have written to the noble Earl, Lord Caithness, to explain the reasons for that.
	As that letter explains, the aim of the Bill is to implement the recommendations in the OFT report on the estate agency market in England and Wales. It was never our intention comprehensively to overhaul the 1979 Act. The OFT report did not consider the case for extending the 1979 Act to include lettings and property management. Consequently, the Government do not have the required evidence base to extend the Act in that way. In addition, there has been no consultation with industry about this proposal, in line with normal government practice.
	Furthermore, amending the definition of estate agency work in Section 1 of the 1979 Act would require careful consideration to ensure that the policy objectives were achieved and all the necessary consequential changes were made, and to check for any unintended consequences. Even if all the necessary research and consultation had been done, it would not be possible to undertake this detailedand time-intensive work at this point in the Bill's passage.
	In response to points made by the noble Lords, Lord Lee of Trafford and Lord Razzall, and the noble Earl, Lord Caithness, I can assure noble Lords that the Government will continue to monitor the private-rented sector and the property sector more generally, including direct sales by property developers, to determine whether there is market failure. At some point there may be a need for new legislation in the property sector. I do not share the view of the noble Lord, Lord Razzall, that we cannot come back to this issue, as I pray and hope that our Government will be in power for a long time and we will have many opportunities to revisit the subject. Nevertheless, it is right that these matters are considered on the basis of proper evidence and consultation.
	I hope that the noble Earl, Lord Caithness, will understand that the Government have gone as far as they can to meet his concerns. I reassure him that the Government will continue to keep a close eye onthe issues that he and other noble Lords have raised in the debate today.

The Earl of Caithness: My Lords, the Minister said that he hoped that I would appreciate that the Government have gone as far as they can to meet my concerns. I do not think that the Government have gone anywhere to meet my concerns. They have stayed absolutely still. They have put up the usual brick wall. They have the usual word at the top of the brief for the Minister on the amendment: "Resist". I remember it well; I lived with it for 10 years.
	The Government, not we, instructed the OFT. The fact that they got their instructions wrong and, as a result, got a lousy report that did not cover another important part of the industry is not our concern. It is time that the Government put that fault behind them and remedied it. Here is a good chance to do so. I do not accept what the Minister says: that it is impossible to do all the necessary work at this stage of the Bill. I used exactly the same arguments on Bills that I was trying to take through your Lordships' House. When I was defeated, it was remarkablehow quickly those problems disappeared. The Bill might have been held up for a short period, butwithin the legislative Session the Bill was passed as amended.
	I agree with the noble Lord, Lord Razzall, whom I thank for his support, and the noble Lord, Lord Lee, that it is very difficult to get legislation. There is no way that the Government would introduce a Bill solely to regulate the letting agents. That would have to be part of a bigger Bill; the DTI would have to dress it up and include it as Part 8 of a wider Bill. The chances of that are very small, so I think that we ought to test the opinion of the House.

Lord Kingsland: The aim of this amendment, together with Amendments Nos. 150A, 150B and 150C, is to enable legal disciplinary practices, that do not have external ownership, do not seek to provide multidisciplinary services and offer only the services that an ordinary firm of solicitors can provide, tobe regulated under the Law Society's mainstream regulatory amendments. We emphasise that even if these amendments were accepted, multidisciplinary practices and firms in which there was external capital investment would still be regulated under Part 5; that is, under those provisions which deal with alternative business structures.
	These amendments develop the approach of those discussed right at the end of the third day of Committee: to permit those who play a significant part in running a firm, such as the finance director, to be recognised with the status of a partner even though they are not qualified lawyers. Under the Bill, it will be possible to make non-lawyers partners in solicitors' firms, but the price of doing so is that those firms will be regulated under Part 5. In our submission, that is bound to cause a substantial but unnecessary regulatory burden.
	Sir David Clementi's report identified the additional challenges for regulation that would arise from either external ownership or the provision of multidisciplinary services, and we have no argument with that. But in dealing exclusively with practices that have neither of these characteristics, Sir David makes no sharp distinction between firms all of whose partners are solicitors and those with some legally qualified partners and some who are non-lawyers. In his report he said:
	"Legal disciplinary practices (LDPs) are law practices which permit lawyers from different professional bodies, for example solicitors and barristers, to work together on an equal footing to provide legal services to third parties. They may permit others ... to be Managers, but these others are there to enhance the services of the law practice, not to provide other services to the public".
	Sir David concluded that the majority of the partners should be lawyers. These amendments, therefore, are designed to secure precisely that. The Law Society would establish a register for permitted non-lawyer partners and set requirements for eligibility on the register. The requirements would include a character and suitability test so that individuals who could not, by virtue of previous misconduct, become solicitors would not be permitted to become non-lawyer partners. Moreover, potential partners would have to demonstrate familiarity with the Law Society's principles of professional conduct, as all managers and partners of a firm share a responsibility for ensuring that the firm complies with its regulatory responsibilities. In our view, this would respond to the hesitations expressed by the Minister at a rather late hour. There is no reason to assume that the Law Society's regulations would be any less rigorous than those under Part 5.
	This approach is wholly consistent with our view, shared by Sir David Clementi, that the ABS arrangements should be introduced incrementally. These follow on from the previous set of amendments. In our submission, they contain the necessary guarantees that the Government are seeking and ought to be accepted. I beg to move.

Baroness Ashton of Upholland: The noble Lord, Lord Hunt, loves to entice me to do things. I try very hard, as he knows, to resist his enticements, though occasionally I succumb. I do not plan to succumb today on this amendment, but I shall say a little about the approach I have sought to adopt in this part of the Bill.
	One of the critical concerns when considering regulation and how to make alternative business structures work has been consistency. Consistencyis very important in how Part 5 will work. I had the privilege of meeting the trademark attorneys yesterday and talking to them about their concerns regarding some organisations.
	I do not dispute for a minute that there are different types of alternative business structure firms, and that some will involve lower or higher risks. We have already had some conversations on the third day in Committee, and no doubt we will have more today, about those issues. However, I do not accept the principle that, even where a majority of lawyers control the firm, there is less influence or less potential for influence from non-lawyers. Noble Lords will know that, in the legal profession as much as elsewhere, even one individual can have a huge impact on any kind of company.
	In the financial services market, control beyond10 per cent is treated as significant. I do not see why we have to consider legal firms differently in that context. In Part 5 we have provided that any person or body who controls 10 per cent or more has to be individually approved by the licensing authority. We have given flexibility to low-risk bodies—those whose total control by non-lawyers is less than 10 per cent—but we do not exempt them from the regulations in Part 5.
	It is also important to remind ourselves that inPart 5, whatever the level of influence or control of non-lawyer managers or owners, they can personally be held liable for breaches of professional rules. They are accountable to regulators in the same way as lawyers and, equally, may be disciplined for misconduct. That is an important safeguard in the context of some of the concerns raised in your Lordships' House and beyond.
	Above all, we want to ensure consistency—the classic "level playing field"—and appropriate regulation, hence the "low risk" status of companies whose total control by non-lawyers is less than 10 per cent and a clear regulatory framework for those whose non-lawyer control is above 10 per cent. As I recall saying during the passage of the Compensation Act, regulation need not be heavy-handed or seen in a negative way. Quite the opposite; this is a very positive measure, which we hope organisations will embrace. I accept that we need to think carefully about how regulation works and ensure that firms feel able to participate in ensuring its effectiveness. The Law Society and others will be critical players in that, but I do not accept that we should make exemptions or have differences in how it is done. That is not to say that I do not think that the Law Society would make good rules, I hasten to add.

Baroness Ashton of Upholland: It is not onerous and difficult to understand—far from it. I am grateful for the noble Lord's comments about my light touch. We have talked a lot about the partnership between the frontline regulators and the Legal Services Board; we have had some very interesting and satisfactory debates about how that might work. It is important that we continue with that theme, but we arenot minded to have the setting up of different sets of regulatory framework. It is much better to be consistent. With no discredit at all to the work of the Law Society or its abilities in this regard, we believe that it is better to do this as we have set it out in the Bill, to be clear about the role that Part 5 plays and to be clear with all those involved in alternative business structures about their responsibilities and their liabilities. But we hope that we will allay some of those concerns in the way in which the system is set up and taken forward—and I am sure that we shall return to that particular point at length and between stages of the Bill.

Lord Kingsland: I am of course most grateful to the Minister for her reply. I can only conclude from her responses that she disagrees with the judgment ofSir David Clementi—and I must say that I share the surprise of my noble friend Lord Hunt of Wirral.
	The provisions under Part 5 will not come into effect for some considerable time; by contrast, once this Bill gains Royal Assent, it will be possible to start immediately with legal disciplinary practices under the aegis of regulation by the Law Society. There is no reason why the Government should not look very carefully at the system of regulation applied by the Law Society to see whether it meets the kind of criteria that they would like to see met under Part 5 generally. The Government would have three years to make this assessment.
	Given that we all seemed to agree during the previous day in Committee that an incremental approach to alternative business structures was highly desirable, here is a golden opportunity for the Government to put that philosophy into practice. Where is the danger? The Minister can always intervene and say to the Law Society that its regulatory system is not up to scratch and that they want something tougher and more penetrating. But it would provide the Government with a marvellous opportunity for a dry run for what they hope to achieve in future with the provision of external finance and multidisciplinary practices.
	The Minister is nodding but demonstrating no inclination to rise again to her feet.

Lord Kingsland: This is another amendment which comes from the patent and trade mark agents. I was delighted to hear from the noble Baroness that she has met representatives of the trade mark and the patent bodies, as, indeed, she undertook to do on the previous Committee day. I am extremely grateful to her for taking that trouble.
	This amendment relates to the ownership qualification for a licensable body, as set out inClause 71(1)(b). It arises specifically out of the unusual position in which the patent and trade mark agents find themselves in comparison with other approved regulators. Patent and trade mark attorneys have never been restricted as to their ownership. As I understand it, a number of firms—at least one major firm and several smaller ones—have external owners, and have done so for a long time. I should emphasise that this situation is perfectly legal.
	As far as I can discern, there has never been any suggestion of a risk to a consumer, nor indeed any risk of conflict of interest. To us it seems inequitable to regulate a business practice that has so far been perfectly legal and where no risks have been identified. If the Bill is passed as it stands, this would cause considerable cost and, indeed, disruption both to existing firms and to the regulatory authorities themselves, who would be compelled to become a licensing body for their members. I beg to move.

Baroness Ashton of Upholland: I am grateful to the noble Lord for his remarks about the meeting that I had yesterday with both organisations. It was a very good meeting. I plan to correspond with them and to put copies of the correspondence in your Lordships' House. There were misunderstandings on a number of issues that I was very pleased to clear up and which I shall set down in writing. We discussed the issue that the noble Lord has brought forward in this amendment.
	I do not think that it will come as any surprise that I shall not accept the amendment but I am mindful of three points which I discussed with the organisations yesterday and which are worth commenting on. The first concerns the issue that I believe we have already touched on; that is, making sure that regulation is simple and straightforward to enable the firms which, as the noble Lord rightly says, are perfectly legal and are doing a fine job, to be regulated without feeling that it is a burdensome or additional pressure.
	The second issue that we discussed was cost. We will continue to talk about our desire to make sure that it is not in any way a prohibitive feature of what we put in place. The Bill is deliberately flexible to allow that. The third issue that they were concerned about was the transitional time. Again, I am very keen to hear their thoughts and views on what that might be, so that we can have a discussion on how to approach that. I am not minded to allow an exemption, not surprisingly, because the way in which the amendment works would mean that it would be a widespread exemption. I know what the noble Lord is seeking to achieve. We know that a number of the firms concerned would, under Clause 106, fit in the low risk, 10 per cent status. Those will have rules modified to suit the lower risk that they present. As I have indicated, we are in discussion with them about their concerns about how it would work in practice.
	I am not minded to exempt, but I am very clear that we want to make sure that this works effectively for them, that it is not burdensome, that we deal with issues of cost, and that the transitional period is appropriate. I hope that we will be able to allay their fears in that way, which may get us not quite to the same point, but at least to the point where they will be content.

Lord Kingsland: This amendment would remove the obligation on the Legal Services Board to make rules in its capacity as a licensing authority. The principle in the Bill for the regulation of alternative business structures is that frontline regulation should be carried out by the approved regulators once they have received authorisation to act as a licensing authority. I emphasise that only approved regulators can seek to become licensing authorities; it would not be open to any other regulatory body to fulfil that role.
	The principle that only approved regulators can seek to become licensing authorities in itself provides an important protection. It is right that the same consumer protections are in place in respect of alternative business structures as apply to ordinary law firms. It is also right to ensure a level playing field, so that the regulatory requirements applying to alternative business structures are equivalent to those that apply to ordinary law firms.
	That is best achieved, we submit, by ensuring that, as the Bill clearly intends, the same regulators are responsible both for ordinary law firms and for alternative business structures. However, that principle is undermined by the provisions that would enable the Legal Services Board itself to act as a licensing authority. It is understandable that there should be a power for the Legal Services Board to act as a licensing authority in an emergency. For example, it may be necessary for a variety of reasons to cancel the designation of an approved authority. In that case, to avoid a licensing vacuum, the Legal Services Board would have to step in; but it would be wholly inappropriate for the board to act as a licensor in the absence of an emergency of that type.

Lord Kingsland: I am most grateful to the noble Lord, who makes a good point; but the Bill does set out the circumstances in which an emergency can arise and how the Legal Services Board should act. The philosophy that lies behind the amendment, and many other amendments that the Opposition, other noble Lords and noble and learned Lords have tabled, is to make it clear that the task of the Legal Services Board is supervisory—that it should step in only if one or other of the approved regulators falters. All the amendment seeks to do is to ensure that in normal circumstances the approved regulators are the licensors and that the power of the Legal Services Board is narrowed so as to take that power onto its shoulders only when an approved regulator is clearly delinquent.
	The noble Lord's point is still valid because the question of whether something is an emergency must, in the end, allow for a degree of discretion. It may well be, in the light of the noble Lord's intervention, that I shall have to look again at that aspect of Part 5; but my point is to ensure that the Legal Services Board is not able to trespass into an area which is rightly that of the approved regulator. I am most grateful to the noble Lord for his intervention.
	The argument has been advanced that provisions of this sort would be necessary if the approved regulators were unwilling to become licensing authorities; but that is not a sustainable argument. Why should an approved regulator be unwilling to become a licensing authority or to license a particular form of alternative business structure unless it considers that such a licence could not safely be granted—bearing in mind that it would have to act in accordance with regulatory objectives? Given all of the approved regulator's experience of regulating different sorts of law firm, if it feels that it cannot safely regulate a proposed form of alternative business structure, it would be foolish for it to be directed to do so.
	In the past, there may have been a concern that the professional bodies would decline to permit alternative business structure firms to operate—not on regulatory grounds, but out of a wish to protect their members from competition. However, that argument no longer applies, if, indeed, it ever did. The Law Society, for example, made it clear that, provided the necessary consumer protections are in place, it has no objection whatever to the provision of alternative business structures.
	I suggest that your Lordships also bear in mind that the Bill ensures that, in future, decision-making on regulatory issues will be independent of any representational role which an approved regulator may have. So there is no risk of approved regulators' decisions about alternative business structures being taken on protectionist grounds. I beg to move.

Lord Mackay of Clashfern: I am having a little difficulty in understanding Clause 81. Perhaps I can explain my difficulties so that the noble Baronesscan set them at rest. The first line of the clausestates:
	"The Board (acting in its capacity as a licensing authority)".
	According to the ordinary rules of grammar, you would think that that would apply to the rest of the provision but that is not the case. Subsection (1)(b) says that the board,
	"may make or modify its licensing rules only with the approval of the Board (acting otherwise than in its capacity as a licensing authority or as an approved regulator)".
	So far as I understand the provisions—that may be quite a restriction—the board acting as a licensing authority is the same as the board acting not as a licensing authority in its construction. Therefore, the board has to make the rules acting, under subsection (1)(a), in its capacity as a licensing authority and approve those same rules not acting in its capacityas a licensing authority. That seems a somewhat unnecessary complication. How it is supposed to add to the business, I do not know.
	Assuming that one gets over these slight grammatical difficulties, do the rules that the board makes in its capacity as a licensing authority apply to other licensing authorities? Clause 81(3) states:
	"Licensing rules of a licensing authority are rules as to".
	Therefore, for example, in so far as the Law Society might be a licensing authority, its licensing rules are not the rules of the board, so to whom do the board's licensing rules apply, particularly if they are not intended to apply generally but simply in some kind of overarching emergency? I find this whole provision a little difficult but I have no doubt that the noble Baroness will be able to explain it in a way that even I will be able to understand.

Baroness Ashton of Upholland: I am afraid I am running true to form for the time being. It is not that I feel holed below the water-line but perhaps I need to resolve a little drip. I say to the noble and learned Lord, Lord Mackay, that I am not so foolish as to try to do other than to listen very carefully to what he says about the drafting of the clause. I shall look at the drafting, which is important. I am grateful to him because if he finds the drafting difficult, it is worth looking at it again to ensure that it is as clear as possible.
	On the licensing rules applying to others, they apply only to bodies that authorise the licences and the Legal Services Board rules apply only to bodies that it licenses and not to other licensing authorities. I am not sure whether that makes it any clearer and I shall try to give him further details. I am certainly happy to look at the issues that he has raised.
	I have a lot of sympathy with the intentions behind the amendments so I want to set out how we have dealt with the concerns raised. I completely take the point that one of the themes running throughthe Committee stage of the Bill is ensuring that the supervisory role of the LSB—the noble Lords, Lord Kingsland and Lord Hunt, certainly referred to this—is important and that the board intervenes only where it needs to. I accept that. Earlier today and on other Committee days we have spoken about the partnership approach. We think we have set this out to prevent the board acting prematurely as a licensing authority.
	Schedule 12 is important in that context. We have three sets of circumstances in which bodies can approach the board for licences: first, where there are no competent licensing authorities for the service that a body wants to provide and none is applying to be designated, so there is a gap in the market, if I can put it that way; secondly, where there are competent authorities, but they have determined that they do not have suitable regulatory arrangements, and none is planning to make such arrangements; and, thirdly, where there are non-commercial bodies, such as not-for-profit bodies, where licensing authorities have suitable arrangements but none is offering terms that are appropriate for those bodies. In addition, the board is not obliged to grant licences when any of those conditions are met. It still has to consider the merits and it may turn down the body.
	I completely accept the need to deal with the concern that the board should not be able to license bodies where other licensing authorities have said that they do not consider they can do so safely. There are two different interpretations of what we might mean by "safe" or "unsafe" in this context. It may be that for individual bodies rejection generally does not allow them to approach the board. Schedule 12 is constructed to avoid that. It applies only where the general circumstances do not allow bodies to be licensed—not where bodies have had unfavourable decisions. The only exception is non-commercial bodies, such as not-for-profit agencies, for which special provision is made in order to maintain the health of the not-for-profit sector.
	The other meaning one could put on this is that licensing authorities do not feel able or competent to license and regulate those bodies because of how they are structured. That is covered by the second ground in Schedule 12; it is what "suitable regulatory arrangements" means, although it may also be that licensing authorities want to build up experience in more unusual forms of alternative business structure firms. They may not have suitable arrangements for two broad reasons; the authorities may not have prepared licensing rules for the services in question, either because they are not an authority's intended market or because they are unfamiliar; or they may be a combination of services that authorities feel cannot be safely licensed.
	The intention behind the amendment is that the board should not be able to license bodies either. It sounds fine in principle, but licensing authorities will be experts and if, having considered the situation, they conclude that licensing is not safe, I would expect the board to respect that. I remind the Committee again that the board is not obliged to issue licences. It may not have suitable licensing rules and may conclude that none can be devised. It is important to consider the possibility that licensing authorities have not created regulatory arrangements for a full range of services. I have indicated that it is particularly important for providers such as not-for-profit bodies. It is unlikely that they would not be catered for, but we must ensure within the Bill that we have thought of the possibility that that could happen.
	We agree with the thrust of wanting the board to step in only as a last resort, and Schedule 12 is designed for that purpose. I hope that, on reflection, the noble Lord will agree that we have got that right and will feel able to withdraw the amendment.

Lord Kingsland: moved Amendment No. 108C:
	Clause 81 , page 47, line 25, at end insert—
	"( ) appropriate provision requiring the licensingauthority to consider the likely impact of a proposed application on access to justice when determining the application,"

Lord Kingsland: The amendment raises an issue rightly debated at considerable length during the clause stand part debate initiated by the noble Lords, Lord Thomas of Gresford and Lord Maclennan of Rogart. It concerns the desirability of having a specific access to justice provision in Part 5. Clause 1(1) contains an access to justice provision as one of the seven objectives that the Legal Services Board and other authorities designated under the Bill have to take into account. However, it is only one of seven; and in the balancing exercise by a regulatory authority, it might not carry the weight that we believe it ought to carry when designing an alternative business structure under Part 5.
	I apologise to noble Lords for rehearsing some of the arguments that have already been raised; but this amendment inserts a specific access to justice requirement at page 47, line 25. It makes clear that, in itself, access to justice should be a crucial component in the design of any alternative business structure. I make no apologies for quoting the Law Society's response to the Government's consultation paper In the Public Interest:
	"New entrants into the market may bring about some benefits. However, there is a risk that there may be long-term structural effects that destroy service provision and the fabric of small communities. Put bluntly, new entrants might cherry pick more profitable and less complex areas of work, driving down the profitability of established local firms who offer a full range of services at the heart of their communities. If that happened, where would consumers go for advice on complex matters?
	The Law Society's conclusion is that whilst the regulatory issues concerning new service providers can be dealt with ... there are very serious risks to access to justice from the uncontrolled admission of new entrants. Existing practitioners report that in many areas, a number of existing firms serving small localities would be in jeopardy if large institutions entered the market for legal services. We believe that the Government needs to carry out much greater research into the likely impactof liberalisation before taking ... decisions on the wayforward".
	The Joint Committee of both Houses that examined the draft Bill under the chairmanship of my noble friend Lord Hunt of Wirral also drew attention to this issue. It stated that it was,
	"persuaded by some of the evidence suggesting that some of the reforms may reduce geographical availability. We consider that ABSs may reduce the number of access points for legal services and we see this as a potential problem. There is clearly an issue here and the only conclusion we are able to draw is that we cannot be sure how it will work out. We recognise that there may be a trade-off between the quality and accessibility of advice—for example, a small, high street solicitor in a rural area may not be able to provide the specialist advice a client requires. We recommend that the Government amends the draft Bill to ensure that the impact of ABSs on access to justice, particularly in rural areas, informs the decision-making process for licensing an ABS firm".
	Our amendment does not assume that the consideration of the impact on access to justice would be fatal to an application for a licence; it is simply intended to ensure that the licensing authority considers that aspect when an issue seems likely to arise and gives it full weight in determining its application. I beg to move.

Baroness Ashton of Upholland: The odd thing about this debate is that I agree with much of what has been said, and I do not want to have a chilling effect. I am concerned to ensure that we allow only proper and appropriate organisations to be alternative business structures. I hear what the noble Lord, Lord Hunt, says about those who are galloping in that direction, and we will need to be clear about that. I agree, too, with the eloquent words of the noble Lord, Lord Thomas, in our discussion on the last occasion and, in part, in what he said today about rural issues, and with the words of the noble Lord, Lord Carlile. I accept what was said last time by the noble and learned Lord, Lord Woolf. Indeed, he and I have discussed his concerns, which I am sure the Committee would expect me to do. I accept, too, the observations made by the noble and learned Baroness.
	I am not a lawyer, but I now have an honorary law degree given to me by the noble Lord, Lord Rix, so that is something. However, there is very little between us. What we are arguing about is how best to express any concerns within the regulatory functions contained in the Bill. I have received a letter from Antony Townsend, chief executive of the Solicitors Regulation Authority, stating that,
	"the amendment is worthy of debate, but we would be concerned at one of the statutory regulatory objectives appearing to hold dominance over the others ... Access to justice is important and we would want to reflect that in a licensing scheme, but not in priority to other important regulatory objectives".
	I raise this only because it is important thatother voices are heard in the debate. I am sure thatMr Townsend would be more than happy to talk to noble Lords further about his concerns.
	We need to remind ourselves first that we do make access to justice a critical feature of the regulatory framework. There is no difference between us onthat. The negotiation concerns whether it should dominate over other factors. The difficulties, which I have sought to outline, are in making sure that there are no unintended consequences that might prevent the proposals from working as effectively as they might.
	I have mentioned before that the arrival of an alternative business structure would enable higher-quality and possibly less expensive legal services to be provided, but for various reasons a small element of what had been available before would have to be provided by the next village or town. If you have access to justice as the overriding feature, that structure might not come into being. This could be detrimental to a huge number of people when what was being proposed to tackle the issue for the remaining few people was quite satisfactory. We have to be careful that we do not accidentally create difficulties, which I think is what the Solicitors Regulation Authority is concerned about.
	We have made it clear that you can put conditions on allowing an alternative business structure to come into being. Those conditions could and would deal with some of the issues about which noble Lords are quite rightly concerned. For example, a firm of solicitors may be required to provide the kind of specialist services in a rural community that would be lost if they were allowed to disappear. It is quite possible for the licensing authority to be very clear and say, "Yes, you can have an alternative business structure but you must continue to provide these services", either because it is a straightforward access to justice issue or because it is a part of its overview of how best to provide services more generally. I do not disagree that we have to be careful and mindful to ensure that—in rural communities especially, but not exclusively so—these structures come into being properly.
	It is a fundamental principle that we provide opportunities for the legal world to expand, develop and grow, thereby providing opportunities for those who consume such services to obtain high-quality services—perhaps better services in some cases and services that were not available before in others. Access to justice is a very important factor within that. There is absolutely nothing between us. As I have said, I endorse all the comments that have been made about that. My difficulty is that there may be unintended problems if we say access to justice is the overarching objective. Between now and Report stage, perhaps the Solicitors Regulation Authority will raise its concerns with other noble Lords. It is the only difference between us, but it is a difference.
	As always, I shall reflect on what has been said, with an understanding that there is no difference between us in what we are trying to achieve but with the proviso that it should not have the consequences that have been raised in Committee today and on previous occasions. I am not accepting the amendment but I am very mindful that in making the system work we must ensure that it does not have the consequences that noble Lords fear.

Baroness Ashton of Upholland: I agree, and I accept that "overarching" was the wrong word for me to use. I meant that it would be a priority. I say to the noble and learned Baroness that—I hate to say this, because your Lordships know far more about legislation than I do, but I have done quite a lot of legislation thus far in my career—the minute one puts something on the face of legislation, one singles it out and it creates a circumstance where one could see it as a priority. That is all that I am seeking to say.
	I acknowledge what noble Lords wish to achieve. I understand completely the concerns that they have raised, for different reasons and from different experiences, and I have no difficulty with that. We do not wish to see unintended effects from alternative business structures that prevent people from getting access to justice, or indeed from getting the best from services that could be provided competitively, and so on. There is no difference between us on that.
	I am happy to consider reinforcing the language. My issue was that, if you pick out one consideration, that might create some difficulties. As ever, though, the purpose of Committee is for me to listen and to take these issues and look at them with greater care. I emphasise again, and I hope that the Committee will accept, that there is nothing between us on what we are trying to do. The question is how best to achieve it. I will look at the wording with regard to what the licensing authority does, which may help us get to where we need to get to.

Baroness Ashton of Upholland: The minute I seethe noble Baroness, Lady Carnegy of Lour, I always think: Scotland. Then I check whether I have information about it. The way that the alternative business structures will be established means that they will cover England and Wales only, so it is difficult to see how they could impact on access to justice in Scotland, other than on what can already happen. A firm could decide that it wished to put more resources into England, Wales or Scotland. That would happen as a matter of course. They are entitled to provide only the reserved legal services through entities that they establish in England and Wales. To provide services from Scotland they need to be authorised or permitted by the Law Society of Scotland or the Faculty of Advocates. So there is no direct impact on access to justice other than what would happen when any firm decided to do something for business reasons and changed how it worked.

Baroness Ashton of Upholland: I shall certainly try; it may sound a bit more disjointed than it would otherwise, but perhaps Members of the Committee will bear with me. I am grateful to the Law Society of Scotland for suggesting these probing amendments, because it is helpful to be able to talk through them and put them on the record.
	I shall start with Amendment No. 108D. Licensed bodies will be obliged as a matter of course to comply with the rules of the jurisdictions in which they operate. That has always been true, as noble Lords will know, for lawyers or authorised firms conducting business abroad, and the same automatic obligations will apply to licensed bodies. The actual monitoring and enforcement of compliance with foreign laws, on the other hand, should rest with foreign regulators. While the board, approved regulators, and licensing authorities may be interested if there were breaches of foreign rules by the persons that they regulate, it would be difficult to place them under a specific statutory duty to ensure that none of those ruleswas breached. That would be disproportionately burdensome and inappropriate. Any failure to comply with any specific statutory duty to this effect could leave those bodies open to judicial review.
	The way in which the Bill is framed makes the primary function of approved regulators, including where they act as licensing authorities under this part, to regulate the carrying out of reserved legal activities in England and Wales. To subject licensing authorities to a duty to be aware of and monitor ABS firms' compliance with a potentially endless range of foreign laws and rules would go far beyond this purpose and could even detract from it. Local standards are best enforced by local regulators. That is how it has worked before, and it should continue in these new forms of practice.
	I am aware, and we have already discussed in your Lordships' House, that concerns have been raised that elements of our proposed ABS firms may not be acceptable to regulators overseas or elsewhere in the United Kingdom. I emphasise that that is no reason to deny a greater choice of opportunities for those providers and consumers who are in a position to benefit. The provisions are facilitative. This Bill is not for one moment seeking to encourage the legal sector to attempt to establish structures in those foreign jurisdictions where the regulatory framework does not allow it. I hope that will deal with that point for the record.
	Amendments Nos. 108E and 108F, spoken to by the noble Lord, Lord Kingsland, seek to extend the scope of the duties of non-authorised persons to provide that duties of Scottish and Northern Irish solicitors and barristers are treated as equivalent, for the purpose of this clause, to duties of authorised persons under this Bill. The duty that the existing Clause 88 imposes is important. It ensures that in the new forms of practice that Part 5 makes possible, non-lawyers will have to refrain from causing or substantially contributing to breaches of lawyers' professional conduct obligations.
	Non-lawyers can play a greater role in the management and ownership of legal practices, but they will not be able to act in a way that jeopardises the professional obligations of authorised persons. It is an important part of our safeguards, and it is deliberately focused on the professional conduct obligations and other rules of approved regulators and licensing authorities under this Bill. I have no doubt that the spirit behind the amendment is in keeping with the spirit of these safeguards, and that the noble Lord is seeking to preserve the highest standards of ethics and quality.
	It should not, however, be the function of Clause 88 to extend this duty to laws and legal professional rules from other jurisdictions. That would create duties for alternative business structure employees and managers to be aware of and respect laws and rules outside the sphere of regulatory arrangements, at the risk of significant penalties; and it would put licensing authorities under the increased regulatory burden of monitoring compliance with laws and rules from other jurisdictions.
	Perhaps I may explain further. Unlike registered European lawyers, Scottish and Northern Irish lawyers may not conduct reserved legal activities in England and Wales simply by using the qualifications they have earned in their home jurisdiction and registering with a regulator here. They must become specifically authorised by a regulator here, as lawyers in England and Wales must, which typically means becoming qualified as a barrister or solicitor in England and Wales. In other words, Scottish and Northern Irish lawyers must become authorised persons in order to carry out reserved legal activities, and they will therefore be regulated under the Bill as authorised persons and subject to the professional conduct rules and other regulatory arrangements of approved regulators.
	It is true of course that Scottish and Northern Irish lawyers will be able to work in alternative business structure firms and draw on their training and experience in providing non-reserved legal services. The same would be true of other non-registered foreign lawyers, chartered tax advisers and academic lawyers, to give but a few examples. But that does not mean that any duties to which lawyers from other jurisdictions may be subject should be treated in the same way as the duties of authorised persons.
	The amendment would place licensing authorities under an obligation to recognise law and legal professional duties and ensure that non-lawyers within ABS firms refrain from causing breaches of these. This goes well beyond current practice. As noble Lords will know, no such statutory duty applies to existing legal services regulators or providers. This duty would present a number of difficulties—it would increase the regulatory burdens for licensing authorities and apply sanctions to employees and managers who cause or substantially contribute to non-compliance with these duties. It would increase the burden upon non-lawyers in ABS firms, who will need to be familiar with these duties in order to ensure that they do not contribute to breaches. The amendment would be onerous, burdensomeand inappropriate, especially in light of the current position.
	Amendment No. 108G would extend the scope of the provision at Clause 107 to apply not only to bodies formed outside UK law or relevant statutory provisions affecting those bodies, but to bodies formed outside England and Wales. Clause 107 allows for Part 5 to be adapted to differences in company structures and other foreign entities, such as differences in management and ownership structures. Since business associations are generally reserved to Westminster, this clause was drafted with only the differences in foreign law in mind.
	However, we are looking into whether there could be any material differences in laws deriving from devolved matters or otherwise and I would like to take that amendment away and investigate the issue further. I would be grateful if the noble Lord would withdraw the amendment, so that we can return to it when we have carried out those investigations.

Lord Kingsland: In speaking to the amendment, I shall touch also on Amendments Nos. 108FA, 108FB, 108FC, 108FD and 108FE in the group.
	They are probing amendments designed to ask the Government two questions. The first is completely innocent: why should trade unions have the exemption from certain requirements under Schedule 11,given to them by Clause 103? That is a request for information.
	Secondly, if trade unions have exemptions of that sort, why should those exemptions not be granted also to other low-risk bodies? Amendment No. 108FA would allow low-risk alternative business structures the same exemptions as those that are sought to be given to trade unions? We recognise the overall need for the safeguards put forward in this part of the Bill, but in these special circumstances, if the Government are already making exemptions, they might appropriately make another exemption here. Those bodies could utilise existing positions, as they would already have the equivalent of a head of legal practice and ahead of finance and administration. Here the Bill is promoting unnecessary measures with regard to low-risk bodies.
	Finally, Amendments Nos. 108FB, 108FC, 108FD and 108FE seek, shortly, to raise the number of non-lawyers that could allow an alternative business structure to qualify as low risk. The amendments reflect the belief that in assessing risk, it is not the number of lawyers that should be taken into account, but rather the professional and ethical standards of the individuals involved in ownership and management of the ABS. For example, professional accountants do not contribute any greater risk to the structure. I beg to move.

Baroness Ashton of Upholland: I am grateful to both noble Lords who have spoken. Perhaps I may begin by talking about the role of trade unions under Clause 103.
	We do not think that the requirements relating to Clause 103 would be appropriate. First, there is the issue of ownership: trade unions are not owned except by their members, and so different issues apply. They also generally provide services only to their members and ex-members and sometimes to members' families. They are regulated under specific industrial relations legislation and their lawyers are regulated by individual regulators such as the Law Society. In some cases, they are highly dispersed organisations. They rely heavily on non-lawyer advisers in the workplace to carry on the frontline role of advising their members. We believe that all those features make some of the licensing provisions unnecessary or unworkable.
	Clause 103 removes the Part 5 requirement to designate a head of legal practice and a head of finance and administration, and it removes the ownership requirement—the fitness-to-own test—set out in Schedule 13. That is why trade unions are treated differently in this context. I should be very happy to get further information from my colleagues if that would be of benefit to noble Lords.
	I turn to the specific issues raised with regard to what we could describe as the second potential category of low-risk bodies. As we have made clear—noble Lords have discussed this today and on previous occasions—a body must have less than 10 per cent management and ownership by non-lawyers if it is to qualify as a low-risk body. The amendment would effectively raise that level to 25 per cent where the non-lawyer managers and owners were members of a recognised professional body. That would include professionals such as chartered surveyors and accountants, as well as professional firms regulated by the relevant institutes. So, in the context of the amendment, a partnership with a quarter of partners who were other professionals, or indeed a legal practice that was24 per cent owned by an accounting firm, would be a low-risk body.
	We do not think that this change would be appropriate. Practices within this category are a type of multi-disciplinary practice, albeit a majority lawyer-controlled one, and perhaps should not be so readily judged "low-risk" as practices with genuinely de minimis levels of non-lawyer control. We would move away from risk-based regulation into the possibility of regulatory loopholes. I wholeheartedly endorse the potential for lawyers to form practices with other professionals, with the benefits that that might bring for them and for the consumers whom they serve. But we need effective safeguards to ensure that legal professional principles and ethical practices are maintained. The head of legal practice and the head of finance and administration and the teststhat Part 5 creates for external owners are key to this. Taking practices with significant levels of non-lawyer control outside the scope of those safeguards would go against the recommendations of Sir David Clementi and could leave them open to the types of risk that Part 5 seeks carefully to mitigate.
	I understand the basis on which the noble Lord moved the amendment and the basis on which it has been supported, but we think that there are differences in the de minimis risk of 10 per cent and below, moving up to a much higher level of ownership. An important point is that we do not want this regulation to be heavy-handed. That would not be the basis on which we would operate. Therefore, noble Lords need to think of this issue in the context of ensuring that we act effectively and properly to safeguard not only the consumer but especially the legal practitioners. Therefore, I hope that the noble Lord will withdraw his amendment.

Lord Hunt of Wirral: In saying how strongly I support these amendments and all that my noble friend has already said, I respectfully point out that the latest Marshalled List that I have shows my noble friend to be in the clear in that AmendmentNo. 108DAA is to be taken with AmendmentNo. 108DAB.

Lord Hunt of Wirral: I hope Hansard will put those words in block capitals. However, there is a doubt. As the noble Baroness has made it clear that she believes that Amendment No. 108DAB is unnecessary, will she give a little thought to why there is a doubt? Perhaps we can explore ways of putting the matter beyond doubt other than in this proposed amendment. I hope she will agree to look at that.

Lord Maclennan of Rogart: moved AmendmentNo. 108H:
	After Clause 107, insert the following new Clause—
	"Miscellaneous
	Pilot scheme
	(1) The Secretary of State shall by order establish a pilot scheme for the provisions of this Part.
	(2) In establishing a pilot scheme the Secretary of State shall take into consideration—
	(a) the demography of the area, and (b) the size of the area.
	(3) The Secretary of State shall lay a report before Parliament on the pilot scheme.
	(4) In producing a report under subsection (3) the Secretary of State shall consult—
	(a) such persons or bodies he considers represent the interests of consumers; (b) such persons or bodies he considers represent the interests of approved regulators; (c) such other persons or bodies as he considers appropriate.
	(5) An order under subsection (1) shall be laid before, and approved by a resolution of, both Houses of Parliament."

Lord Maclennan of Rogart: As we reach the end of our consideration of Part 5, I propose a new clause intended to probe how the Government envisage the rolling out of the alternative business structures. It is also intended to let us consider the possibility that, notwithstanding the Government's commitment to the liberalisation of the provision of legal services and all the uncertainties inherent therein, they may be willing to apply, on the ground, the proper test of how it would work in practice.
	When replying to the Government's consultation paper In the Public Interest?, the Law Society said that,
	"there is a risk that there may be long-term structural effects that destroy service provision and the fabric of small communities ... there are very serious risks to access to justice from the uncontrolled admission of new entrants ... We believe that the Government needs to carry out much greater research into the likely impactof liberalisation before taking final decisions on the wayforward".
	It is very difficult to carry out research without a pilot scheme. The theoretical response to the liberalisation of the market cannot be wholly successful in answering the great uncertainties to which everyone who has looked at this issue has drawn attention. The Joint Committee that examined the draft Bill drew attention to the possibility—which we debated earlier, at some length, so I shall not rehearse those arguments—that some of thereforms may reduce geographical availability. Its report stated:
	"We recommend that the Government amends the draft Bill to ensure that the impact of ABSs on access to justice, particularly in rural areas, informs the decision-making process for licensing an ABS firm".
	The practicalities of establishing a pilot scheme may seem formidably difficult, and I look forward to hearing what the Minister has to say about them. However, in view of the potential consequences of the implementation of Part 5, it is reasonable to proceed by bringing forward the fruits of a pilot scheme to be considered by Parliament. Those who are satisfied that the project is worth embracing in the interests of the consumer will be fortified if a pilot scheme demonstrates that the fears are unjustified. There is no hurry to reach a conclusion. If one takes the advice of the progenitor of this development,Sir David Clementi, it seems that caution is the characteristic that should govern how we proceed.

Lord Kingsland: I am most grateful to the noble Lord for his intervention. That is precisely, as I understand it, the rationale for my noble friend's amendment. The limitation of the pilot scheme, as the noble Lord, Lord Borrie, has pointed out so clearly, is that it would be just one structure in a system which may have many different examples. I apologise for speaking before my noble friend Lord Hunt has had a chance to speak, which I know he will do when the next amendment is called, but the logic behind his amendment is that there should be a period of a number of years during which a whole range of structures might emerge.There could be comprehensive monitoring of all those structures.
	If it transpires that the system is not working as the Government hoped, after five years there will be a cut-off date by which they will, either voluntarily or having been compelled, adjust the system to accord with the monitoring results. That is the strength of the sunset clause as opposed to the pilot project. However, I do not wish to take away anything from what the noble Lord, Lord Maclennan of Rogart, seeks to do. His concerns are plainly our concerns; indeed, they are the concerns as so far expressed on all sides of the Committee.

Lord Mackay of Clashfern: I understand fullywhat the noble Lord, Lord Maclennan of Rogart, has in mind and the difficulties that the noble Lord, Lord Borrie, envisages in a pilot scheme. It occurred to me as these observations were being made that, if a novel type of organisation or business structure was proposed, it might be licensed for a given time to see what effect, if any, it would have, if it were not possible to be definite about that in advance. Looking at the licensing provisions, I am not certain that a licence for a fixed term is clearly within the powers of the licensing authorities. No doubt, however, if it were thought desirable, that could be made clear.
	I can understand that those applying for a licence might not be anxious to set up an organisation for too short a time. If they were confident that it would be all right, they might be rather put off by the idea that it was for a limited term. On the other hand, if you are not sure what will happen, it is wise to have some way to put something right that, it emerges, does not seem to be going right. That occurred to me as a possible approach—I do not put it more strongly than that—where a particularly novel type of business structure is proposed.

Lord Thomas of Gresford: When listening to the noble Lord, Lord Kingsland, I had in mind the words festina lente, and he then used that expression. It is for the Government to take their time—hasten slowly. A number of possibilities have now been put forward. I think that a blanket sunset clause has its problems, although I shall listen to what the noble Lord,Lord Hunt, says in due course. Obviously there must be investment, which after five years could be considerable in terms of money, buildings, people and careers, so a blanket approach is not so attractive.
	On the other hand, the suggestion of the noble and learned Lord, Lord Mackay, has considerable attractions: a specific type of unusual organisation should be limited in its period. A company or individual who wished to adopt that approach would then at least know how much money and so on to put into that organisation to see whether it worked. At the end of the day, I come down in favour of my noble friend's amendment, which contains the possibilities of more than one experiment. A pilot scheme does not necessarily have to consist of one type of organisation in one place. Proposed subsection (2) suggests:
	"In establishing a pilot scheme the Secretary of State shall take into consideration ... the demography of the area, and ... the size of the area".
	It occurs to me that a sensible way of hastening slowly would be to permit one organisation to operate, for example, in a rural area, another in a town area and another to deal with commercial law or whatever. The approach could be either geographical or functional, but there should be a series of experiments taking into account the criticisms of the noble Lord, Lord Borrie, who suggested that it is impossible to say that there must be one type of organisation. The answer is a series of pilot schemes or the alternative proposed by the noble and learned Lord, Lord Mackay.

Baroness Ashton of Upholland: I am very grateful. I shall not stray into the territory of the next amendment, tempting though it is, because in one sense these issues fit together. However, as the noble Lord wishes to move the amendment separately, I will not do so.
	I understand the concerns behind the amendment, but the difficulties of organising a pilot scheme have been addressed extremely well by my noble friend Lord Borrie. The Joint Committee looked at this possibility, certainly in a geographical area, and found it unworkable. It is very hard to police boundaries because of how services are now provided. Noble Lords will know that telephone or internet services, for example, might apply only to consumers from one area, but it is difficult to prevent them going elsewhere for services and to ensure that services stay within the boundaries of an area.
	Conveyancing, litigation and other services can all have aspects that might not be restricted to defined physical areas. One might limit pilot providers to one area, but it is hard to prevent them offering services to consumers elsewhere.
	In summary, any approach that we think of puts serious constraints on the providers, the consumers or both. Freedom of choice for consumers is limited; providers' freedom over what service to offer and to whom would be limited. Anyone outside the pilot area would be denied the benefits of the alternative business structure. There would be possible anti-competitive results as well.
	The Office of Fair Trading pointed out that the,
	"pilot scheme to test ABSs appears very difficult to implement in any meaningful way and would deliver questionable benefits".
	Obviously, it would delay the implementation of the alternative business structure and the benefits that we hope that it will bring to providers and consumers. The Joint Committee concluded that those problems cannot be overcome and we agreed with that.
	The noble Lord, Lord Maclennan, was keen that we set out as much as we can about the timetable to which the Government are working, and I will endeavour to do so. I will write a note to the noble Lord and others who have spoken and place a copy in the Library.
	From Royal Assent onwards, the Law Society can start to regulate lawyer-controlled legal disciplinary practices (LDPs). Smaller regulatory bodies—for example the Council for Licensed Conveyancers, the Chartered Institute of Patent Agents and the Institute of Trade Mark Attorneys—already allow LDPs to operate but will be granted enhanced powers.
	Professional bodies intending to regulate alternative business structures can start to develop their licensing rules. Legal services providers and investors can investigate options for alternative business structure status and develop business plans for change. Certain existing ABS firms—for example, as we discussed earlier, some conveyancing and patent trade mark practices—can continue under transitional arrangements and adapt themselves to prepare for licensing. As the noble Lord, Lord Kingsland, rightly said, there is an issue to be resolved about the length of the transitional arrangements.
	Between February 2008 and November 2009, the LSB chair would be appointed, followed by the LSB board members and the interim chief executive. The LSB would work with approved regulators, helping them to prepare for designation as licensing authorities. In 2010-11, the LSB can process applications from regulators for designation as licensing authorities. As the Committee will know, professional bodies can become authorised to license ABS firms, but only where the rules are fit for purpose. From 2011 onwards, ABS licences can be granted in accordance with licensing rules and the statutory safeguards that we have set out. I hope that that gives a sense of the time frame to which we are working.
	Licensing for a fixed time for unusual ABSs could happen in theory. The Committee will be aware of the difficulties of that for investors, who would have to think about whether it was worth it. In practice, I do not know whether it would be an option. It would be for the licensing body to consider that.
	I hope that that gives a sense of why we could not accept—

Lord Hunt of Wirral: We are greatly indebted to the noble Lord, Lord Maclennan of Rogart, for having initiated an interesting debate on the question of pilot schemes. I would now like to try a different approach.
	In the Joint Committee, we spent some time working out how we could foresee some of the problems and difficulties that might arise with alternative business structures. We agreed with the sentiment expressed by the noble Lord, Lord Borrie, that it is difficult to envisage pilot schemes that could adequately test the various structures that might come forward under this part of the Bill. However, we were left with what the noble Lord, Lord Maclennan of Rogart, I think, called a shot in the dark; we were left with the impression that no one was quite sure what would happen. Although, as has just been pointed out, we came to the conclusion that we could not see that a pilot scheme would be suitable for the introduction of ABS licences, we were still very worried about the level of uncertainty that existed about the impact of ABS provisions. That is why, in our recommendations, we urged the Government to use less haste and more care and to follow the approach of the Clementi report, which gave rise to Table 5 on page 85 of our report.
	I am indebted again to the Law Society of Scotland, whose Michael P Clancy, director of law reform, came down and spent some time trying to think through the best way forward. The whole question of alternative business structures has already been considered in Scotland. A research working group on the legal services market in Scotland was established by the Scottish Executive, and I have the benefit of its report, which it submitted last year. That report concluded that the case for alternative business structures in Scotland and the suitability of regulatory arrangements such as those proposed for England and Wales were a matter for further policy development by the Scottish Executive in consultation with interested parties. The report will serve as a basic source of evidence for future consideration of the case for alternative business structures in Scotland.
	Accordingly, Mr Clancy and his colleagues inthe Law Society of Scotland concluded that it is vital that proper research of the English provisions is undertaken in order to inform policy development not only in Scotland but in other jurisdictions. I am grateful to him and his colleagues for drafting the amendment, which would provide for a monitoring and research programme into the effectiveness of the mechanism for the regulation of alternative business structures, subject to a sunset provision. When we are as unsure as we are at the moment about what will happen with ABSs, it is right for a properly structured study to be undertaken so that we can examine what effect the ABSs are having.
	The study needs a proper structure. The noble Lord, Lord Clinton-Davis, said that we could consider the matter from time to time and raise it in debates, but there would be nothing as good as a properly structured study, led by the Government in consultation with all interested parties, just to see exactly what was going on and how the whole procedure was developing. That is why in the amendment, which is headed "Monitoring and research", we ask the noble and learned Lord the Lord Chancellor to,
	"provide for the carrying out of a study".
	The obligation is therefore on the Government to carry out a study. The Minister may say that they are going to do that anyway, but I know from my experience in government that all sorts of priorities come across ministerial desks from time to time and take their place in the queue. I would like this House to put this study right at the top of the list.
	The amendment proceeds to suggest that the noble and learned Lord the Lord Chancellor should,
	"make such preparations for the study to begin as soon as regulations bringing this Part into force; and such preparations"—
	these are only suggestions—
	"may relate to the instruction of a research team and formation of a research advisor group to assist in the direction of the study".
	Then, of course, the Government must report to Parliament. There is provision for a report to be laid before Parliament within three years of this part of the Bill coming into force.

Lord Thomas of Gresford: I declare an interest in apple pie and motherhood, and in monitoring and research, which are obviously essential to see how the various schemes work. But monitoring and research require something at the end of the process: if the monitoring and research into a scheme say that it does not work, what happens then? I am not attracted by a sunset clause, as I indicated in the previous debate. Perhaps the Minister could assure us that, under Clause 84, the power of the licensing authority to,
	"modify the terms of a licence granted by it",
	and, under subsection (1)(b),
	"in such other circumstances as may be specified in its licensing rules",
	could cover the modification of a class of alternative business structures that were proving to be particularly unsatisfactory as monitoring and research demonstrated. Something along those lines might be a way forward.I am not sure that that was the intention behind Clause 84(1)(b), but the ability to alter a licence significantly to get rid of, for example, cherry-picking in a particular class of alternative business structures would be very desirable. I invite the Minister to consider the proposal along those lines.

Lord Holme of Cheltenham: rose to ask Her Majesty's Government what assessment they have made of the level of Chinese investment in Africa.
	My Lords, the purpose of this Question for a short debate is to draw the attention of the Government and your Lordships' House to the new Chinese scramble for Africa. In preparing for the debate, it occurred to me, perhaps rather impertinently, that although the People's Republic of China and your Lordships' House are very different in their scale and powers, they nevertheless have two characteristics in common. The first is an excessive respect for the political wisdom of elderly men in suits. However, no sooner had I formed this idea when I realised that while no doubt all participants in the debate are characterised by their great wisdom on Africa, the majority by no means conform to the stereotype of elderly men in suits. So that will have to remain dangling as a hypothesis. The other characteristic these two great institutions have in common is a lively respect for their own history, so I shall start with some history.
	The Chinese did not arrive in Africa yesterday with President Hu Jintao's tour. In fact they first arrived in 1414, half a century before the Portuguese and hundreds of years before the other European waves of traders, slavers and colonialists. In 1414, Zhang He, the Grand Eunuch of the Three Treasures, a title that makes British admirals look positively understated, took a fleet of 60 galleons and 100 auxiliary vessels as well as 30,000 soldiers along the length of the East African coast. He came in search of trade, prestige and wild animals for the emperor, who was of course the first of the newly arrived Ming dynasty. Unlike many of his European successors, Zhang He came and went in peace, apart from a skirmish with the people of Mogadishu who were noted in the ship's log as being "quarrelsome". Some things do not change.
	Let me fast forward to the 1960s and the Cold War, when the Chinese returned in strength as missionaries of Mao and allies in various liberation struggles. They built roads, bridges and the TanZam railway swiftly and efficiently in order to reduce the reliance of frontline states on apartheid South Africa. They were always ready to train and arm the leaders of the struggle, competing at that time for dishonour with the USSR and the European members of the Warsaw Pact. There followed a period of relative disengagement until around 10 years ago, when a dramatic new chapter opened in Chinese-African relations. It is no exaggeration to say that the accelerating Chinese drive into Africa in recent years is one of the most significant geopolitical and economic events of our time, involving as it does a search for natural resources and a drive for new markets, accompanied by an orchestration of trade and investment with an underlying quest for global power and influence.
	Today the Chinese are on the move the length and breadth of Africa. They are buying and selling, importing and doing deals with governments—not least on votes against Taiwan. In some instances, they are selling arms as well as acquiring and then exporting back to China oil and gas, metals and minerals, and agricultural commodities. They are placing their footprint everywhere. The bazaars and markets of Africa are as full of cheap Chinese cotton garments as the British high street, plus everything else that can be imagined from watches to computers, flip-flops to blackboard chalk. No item is too small for the great Chinese economic machine. Chinese hotels and restaurants are opening, as are donated stadiums and radio stations. Chinese medicine is everywhere, and is a great deal cheaper than western pharmaceuticals. Indeed, at the Royal Society of Arts last week I heard a leading Ugandan businessman, Andrew Rugasira, say that it was his belief that within 10 years there would be a Chinese president in one of the African countries.
	What, it may be asked, is the problem, apart of course from wounded western amour propre at seeing a whole sphere of economic and political influence removed so swiftly and expeditiously. First is the problem identified by Thabo Mbeki that the trade flow is too much like the old north/south colonial pattern. Yes, trade between China and Africa doubled from $20 billion to $40 billion between 2000 and 2005 and is expected to double again by 2010, at which point China will be Africa's largest trading partner. But that trade is overwhelmingly in primary commodities. For instance, 25 per cent of China's oil comes from Africa already, significantly most of it from Angola and Sudan. The trade relationship as it stands gives far too little scope for added value in Africa or encouragement of African companies, enterprises and products.
	Secondly, there is a structural imbalance between a superpower like China, with a vast economic machine subject, it must be said, to party and state guidance and direction—what Will Hutton calls in hismost recent book "Leninist Corporatism"—and an atomised Africa which is divided into preponderantly small states. At the China-Africa Forum in Beijing in November, this symbolism was apparent: 43 African leaders going up the red carpet to be greeted one by one, with a negligible role for pan-African institutions in the shape of NePAD and the African Union. The plethora of loans, credits and trade deals were strictly bilateral and often ad hominem. It seems this willbe the case again on President Hu Jintao's current tour of Cameroon, Sudan, Namibia, South Africa, Seychelles, Liberia, Zambia and Mozambique.
	Thirdly, there is the question of governance.Part of the global consensus, articulated in the Commission for Africa and institutionalised in NePAD, is the express link between economic success derived from foreign direct investment on the one hand and good domestic governance on the other. But the Chinese have shown little or no interest in issues such as the rule of law, free elections, respect for human rights and stamping out corruption. They dish out the loans, the gifts and the pet projects with no questions asked, sometimes supporting and even propping up very dubious regimes under the rubric, which is so important to them internationally, of mutual non-interference. So the infrastructure created and the new loans made may suit the African regimes concerned but may not be in the long-term interests of the host country concerned.
	Fourthly, there is the constellation of issues gathered for progressive western companies, NGOs and Governments under the concept of sustainable development: local content, capacity creation, technology transfer, community consultation and environmental conservation. On none of these issues have the Chinese been particularly engaged. When I chaired a conference on behalf of the Royal African Society in Johannesburg just before the China-African Forum, there seemed to be considerable African complacency on these issues. Now the Chinese come bearing gifts and it is difficult to blame them. Although this does not yet appear to be a collective issue for Africans, it does not mean that the rest of the world should stand by mute.
	What should be the response of Governments such as our own, which have taken an excellent lead on Africa, of the large companies involved in Africa and of the relevant NGOs? I believe there is no point whatever in adopting an adversarial approach, snarling at the vigorous newcomer like an old dog in the manger. Our own colonial history precludes too much self-righteousness on our part. The enlightened world community has, by and large, got the right approach at last to Africa and we should now seek to engage the Chinese, first of all as Government-to-Government. I shall be interested to hear the Government's plans for the G8 and whether they intend to raise these matters this summer as a world issue.
	I also say to the Minister that I hope we stop the rapid rundown of diplomatic representation in Africa. If ever there was a time when we need maximum diplomatic representation, it is now.
	I hope major companies do not join a race to the bottom but persist with corporate responsibility and sustainable development and, if anything, raise their game. Companies involved in China and Africa should promote dialogue. I commend de Beers, which has helped to facilitate discussions on codes and standards involving the US as well as the Chinese and Africans. Standard Chartered Bank, which I advise, is active in a similar way in promoting dialogue.
	I hope that developmental and environmental NGOs will be as assiduous in drawing attention to Chinese mistakes as they are in the case of multinationals. LEAD International, which trains people in sustainable development and which I chair, is this March instituting a dialogue between civil society and China and Africa. I think that is admirable.
	The Chinese deserve our respect for their energy and recognition for their new role in the world, but it does neither them nor Africa a service if that respect and recognition is uncritical. Engagement is a two-way process.

Lord Jones of Cheltenham: My Lords, I too congratulate my noble friend Lord Holme of Cheltenham on securing this important debate and on the lucid and comprehensive way in which he covered the difficulties associated with China's current activities in Africa. This is, I believe, the first time that two Lords with the words "of Cheltenham" in their titles have spoken in the same debate. I cannot match the fluency of my noble friend, but I should perhaps explain that Cheltenham has twinning links with both China and Africa, with the town of Weihai in China and Kisumu in Kenya.
	China, as we have heard, has been active for a long time in Africa, particularly since the 1960s in the struggle against colonial rule and then the apartheid regimes in South Africa and Rhodesia. I am currently reading a fascinating biography of one of the great early presidents in newly independent Africa, Seretse Khama, the first president of Botswana. Perhaps at this stage I should draw attention to my registered interests in Botswana.
	In their book, Seretse Khama, 1921-80, Neil Parsons, Willie Henderson and Thomas Tlou devote a section to China's involvement in Africa including the building of a railway line in Zambia and Tanzania in the 1970s. During that period, many African leaders were invited to visit China. Seretse led a Botswana delegation to Beijing in 1976. Apart from seeing developments in China and attending and speaking at events, the team obviously had an informative, enjoyable and sometimes exciting time. On page 333 of the book, it is recorded that the Botswana delegation was the first in a long time which was not presented to Chairman Mao, who was ill and died 40 days later. The authors then write:
	"That night, after feasting and drinking, the Botswana delegation went to bed tired and tipsy. At 3.45 in the morning a series of earth tremors, of two minutes' duration each, hit Beijing. Then there was a massive earthquake which reached 8.2 on the Richter scale, rocking a wide area of north-east China. Its epicentre was 150 kilometres to the south-east of Beijing—in the area that the Botswana delegation was due to visit next. Several buildings collapsed in the city of Beijing and thousands of people fled into the streets. Seretse and Ruth (the President's English wife) were kept awake by the earth movements, as were all other members of their party, save one. Festus Mogae, Botswana's chief economic planner, woke up to experience his room's dizzy movement. He concluded that he had consumed too much Chinese wine, and turned over to slumber on until dawn".
	Festus Mogae is now, of course, President of Botswana, and a more sober person it is difficult to imagine.
	China has been involved in Africa for a long time. In the 1970's, it was to support the struggle for liberation; now the advantages for Africa are not quite so obvious, although China's priority is clear: to create a diplomatic environment that facilitates secure and stable access to commodities. Energy assets rank highest on Beijing's wish list, but metals and minerals, precious stones, timber, farm products and seafood are not far behind. On the website of the Forum on China-Africa Co-operation—FOCAC—there is a statement of China's African policy. I have read it and there is little in it which is objectionable.
	There are still high level visits in both directions. FOCAC claims that in the latest aid package, China offers,
	"preferential loans, debt exemptions, favourable tariff policies as well as training of personnel".
	This is having some effect on hearts and minds. For example, according to Business Day of 2 February 2007, in a recent statement President Mogae said:
	"I find the Chinese treat us as equals. The west treats us as former subjects".
	Artwell Karuru, a reporter working for the Zimbabwean presidential office, says that China's assistance to Africa is,
	"sincere, selfless and without conditions",
	and that it has brought about "concrete benefits" to African countries and people.
	I am sure that part of this is true. One example is a new 1,400 kilometre railway in Nigeria, which China will help to build with an investment of $8.3 billion. But China is particularly active in countries where there is conflict or where the regime is violating human rights—something of which China has been guilty for some time. Zimbabwe and Sudan are two areas of high Chinese activity. And there are conditions; for example, countries must not recognise Taiwan.
	Noble Lords will have seen the article in yesterday's Guardian by Chris McGreal in Lusaka, headlined "Thanks China, now go home: buy-up of Zambia revives old colonial fears". In the article there are complaints that Chinese companies are competing aggressively for business in Zambia. There is nothing wrong with healthy competition on a level playing field, but the article says:
	"China put up the money to build Zambia China Mulungushi Textiles and provided the expertise to run it. It grew to become the biggest textile mill in the country... employed more than 1,000 people, propped up the economy of Kabwe in northern Zambia and kept thousands of cotton growers in business. But last month the factory shut down production, strangled by a new wave of Chinese interest across Africa that some critics say amounts to little more than another round of foreign plunder as Beijing extracts minerals and other natural resources at knock-down prices while battering the continent's economies with a flood of subsidised goods and surplus labour. Also in Zambia, two years ago 49 miners were blown up in an explosives factory at the Chinese-owned Chambishi mine in an accident blamed on lax safety. Last year police shot five miners at Chambishi in a riot over working conditions".
	I have heard similar complaints in Botswana. In the construction industry the story is that Chinese companies are hoovering up nearly all the business, threatening the survival of existing local companies and their employees—companies built up over many years. The view has also been put to me that, rather than employing local labour, the Chinese are bringing in their own labour and materials, much of it sub-standard, to undercut local companies. There is no doubt that there are strains caused by China's activities in Africa.
	The Institute for Public Policy Research, in its document The New Sinosphere—China in Africa, suggests that western policy must change, for example to lower or abolish tariffs to open our markets to products from Africa. The IPPR also has something to say about the OECD Convention on Combating Bribery of Foreign Public Officials which it says "contains serious loopholes". I recommend that noble Lords find this document on the internet.
	I will be interested to hear from the Minister what our Government intend to do to adapt UK policies to meet the challenge of China's growing influence in Africa.

Baroness Northover: My Lords, I too thank my noble friend Lord Holme of Cheltenham for securing this debate. As we have heard, it is an area with massive significance to which far too little attention has yet been paid. As ever, he is very prescientin identifying it and very perceptive in his analysis of it.
	China's presence and investment in Africa continue to grow. That is, of course, not necessarily a bad thing, as we have heard. After all, decades back, it was China that was in dire poverty and now we see it powering forward through trade and industrial growth, beginning to take at least some of its people out of poverty, and many more if its expansion continues at its current rate. India is following suit. People used to despair of poverty and over-population in Asia. Now we talk of the Asian tiger economies.
	We all know that aid and debt relief will not in the end bring African countries out of poverty and that it is only by increasing trade and expanding their economies that they too will flourish. China could greatly assist with this process. It is welcome that China has increased its contributions to peace-keeping forces in Africa and support for the developing African Union, but people are very apprehensive of its rapid expansion in Africa. Part of our fear may well be that after a long period of being able to influence what happens in Africa, this is slipping from our grasp. Yet there are real reasons to be deeply apprehensive about what is happening, as all noble Lords have made extremely clear.
	There are several levels to this: economic, political and diplomatic. At the end of 2005, China was Africa's third largest trading partner after the US and France. Its trade volume has increased tenfold in seven years. About a third of China's oil now comes from Africa. Not surprisingly, given that nations act out of self-interest, China has focused particularly on resource-rich nations. Its involvement is not necessarily bringing benefits to the wider economies of these African countries. Does that sound familiar? We should think of the railway lines in Africa—not serving the continent but there to bring resources to the coast for transport to Europe.It is very worrying if the same thing is happening again.
	Of absolutely key importance is the fact that cheap Chinese manufactures are flooding African markets, pushing out African producers. We heard about the effect of that in Botswana from my noble friend Lord Jones. But we are still dumping cheap products from the EU in developing countries and we have to take action there.
	China has opposed American special treatment for Africa. According to WTO rules, China would have to agree a waiver for these preferences to continue, which are of vital importance to many African countries. Then there are the human rights and governance issues that we have heard about, where China's record is hardly the best. Trying to lever good governance in Africa in the way that we have begun to do is simply not on its agenda. World Bank President, Paul Wolfowitz, complains that China ignores human rights and environmental standards when lending to Africa. Chinese firms have ignored international initiatives to make the mining industries cleaner. There is also the concern that with the level of natural resource extraction not only will Africa be exploited, as it always has been, but that it will be left with a great deal of environmental damage.
	Chinese arms transfers to conflict zones, support for repressive regimes, and its blocking of UN resolutions on Darfur are all extremely worrying. The international community needs to encourage China to support efforts to promote stability and reduce the risk of conflict in Africa, for its own long-term interest as well as those of the African peoples whom it may be damaging.
	On the political and diplomatic front, we are familiar with US aid being tied to support for US foreign policy or use of US companies and with the Americans calling in those countries to support them in the UN; for example, on Iraq. China is learning to play the same game. China stresses that it has never colonised any part of the African continent and states that it has supported a number of African independence movements against their western colonial masters. China's "engagement agenda" in Africa consists of a long list of foreign policy interests, including that African states adhere to the "one China" policy—that is, to sever diplomatic ties with Taiwan—and to improve co-operation, in particular in the United Nations. Thus China calls in African support for the positions that it takes in the UN. It is unpredictable where that will take us all.
	Most importantly, all of China's interest in African countries is accompanied by guarantees that national sovereignty will not be questioned. This "no strings" approach enables Chinese companies to operate easily in countries such as Sudan and Zimbabwe, with terrible effects. The sale of arms to those countries is deeply alarming. Clearly, the relationship between Africa and China is unequal, just as was Africa's relationship with Europe and the US, and still is. Clearly, Africa may be trading its present for its future.
	As the IPPR report, to which the noble Baroness, Lady Whitaker, referred, concluded:
	"China represents opportunities and risks for Africa. Managed well, China could bring real development benefits to Africans ... Managed badly, however, China's role in Africa may lead to worsening standards of governance, more corruption and less respect for human rights".
	We will have to be extra vigilant that our engagement with Africa follows the laudable lines that we wish on the Chinese. What we see developing there now is deeply concerning, and the West will need to do its best to convey to African nations the limits of the benefits that they think they are gathering. We will need to impress on the Chinese the need for stability, good governance and development in the long term interests of all. I therefore look forward to hearing what proposals the noble Baroness has to address these problems.

Baroness Royall of Blaisdon: My Lords, this has been an excellent and timely short debate. I thank the noble Lord, Lord Holme of Cheltenham, for enabling us to discuss these important issues. I am grateful to him also for providing a historical perspective. Napoleon Bonaparte said:
	"Let China sleep, for when she wakes, she will shake the world".
	China's re-emergence as a great world power is having a profound global impact, not least in Africa. Asthis impact deepens, our interest in the kind of international actor that China is becoming grows ever greater.
	As we have heard, China's overall influence on Africa has been increasing dramatically. Its footprint is everywhere. We welcome the growing engagement and believe that China's role in Africa is extremely important. However, we want to help to ensure that China's impact becomes even more beneficial for sustainable development and poverty reduction in Africa. As the noble Lord, Lord St John of Bletso, said, Africa needs development, not under-development. We want to help to ensure that engagement in supporting the new African agenda is led by Africans—the NePAD agenda of democracy, transparency, peace and market. We can do that only by constructive and strategic dialogue with China.
	The most striking aspect of China in Africa is how quickly its role is evolving. Trade and investment are the driving forces of Chinese engagement. In 2006, China/Africa two-way trade reached $55.5 billion—up 40 per cent on the previous year. The balance of trade was $2.1 billion in favour of Africa. Two-way trade is projected to reach $100 billion by 2010. Since 2004, China's investment in African infrastructure has been greater than that of the total for OECD countries. China's emergence as a donor to Africa has widened the choices available to African countries. We welcome that development.
	Political relationships are moving apace. In 2006, China published its first White Paper on Africa; President Hu and Prime Minister Wen both visited Africa; and in November there was the China/Africa summit in Beijing. A number of key Chinese commitments were announced at the summit. They included the doubling of aid by 2009, providing concessional credits of $5 billion, establishing a$5 billion fund to support Chinese investment in Africa, cancelling debt due in 2005 for low-income countries, and tariff reductions. I can certainly assure the most reverend Primate the Archbishop of York that we will carefully monitor the debt situation.
	In respect of the Commonwealth Heads of Government Meeting in Uganda, I shall feed the views of the most reverend Primate to my noble friend Lord Triesman. So far as I am aware, the agenda has not yet been set. However, I am confident that China/Africa will be a subject of discussion in this as in many other multilateral fora.
	The overall theme of the Beijing summit was "Amazing Africa: a continent of opportunity". China very much accentuated the positives. That was very different from the tone of the Gleneagles summit, where we emphasised the approaches that the international community and Africa need to take to achieve poverty reduction. However, we do not believe that those emphases are contradictory. Africa is, and should increasingly be, a continent of opportunities for Africans and foreign partners. But long-term economic opportunities depend on peace and security, sound economic and political governance and a focus on sustainable development and poverty reduction. I rather liked the analogy of the noble Baroness, Lady Rawlings: we want peace as well as pipelines.
	China's economic engagement has many positive features. It has boosted growth rates, improved trade balances, increased government revenues and provided cheap goods for African consumers. But with opportunities come important challenges. Chinese exports compete with African products in African and overseas markets. There have been concerns about Chinese loans neutralising debt-relief efforts by the UK and other OECD countries. There are also issues of environmental impact, transparency and the appropriateness of some Chinese infrastructure projects. China's approach is built on her stated policy of non-interference in internal affairs, and that must worry many of us.
	Then there is Darfur and Zimbabwe—subjects that were raised by many noble Lords, including the noble Baroness, Lady Rawlings. As my noble friend Lord Triesman said last week in your Lordships' House, China is now a great world power and, with that, comes a responsibility which goes further than commercial interests. This week, President Hu held private talks with President Bashir about the critical situation in Darfur. I am confident that he delivered strong messages about the urgent need to resolve the crisis. I hope that the messages will be heard and heeded.
	Clearly, there are some differences in our approaches towards Africa, but it is crucial that all African partners support Africa's own commitments to sustainable development, including good governance and sound economic management. That is in the long-term interests of Africa and its partners, including China. Stable, well governed and prosperous countries make the best trade and investment partners. Zimbabwe, where Mugabe and his regime are destroying the economic base and destroying lives, where infant mortality is accelerating and where the average life expectancy is 37 years for men and 34 years for women, is perhaps the starkest example of where we hope that China can be more supportive of international efforts to encourage reform. As in Sudan, this is the right thing to do, but it is also in China's self-interest to play by the international rules.
	The most effective way to address our concerns is to work closely with China so that all our efforts support our common aspirations for development in Africa. The Government have undertaken a range of activities to do that. In 2005, the Prime Minister invited a Chinese representative to sit on the Commission for Africa. China's engagement in Africa regularly features in ministerial contacts with the Chinese. In 2006, DfID hosted a delegation from China that reviewed how the UK manages its overseas development assistance. We invited the Chinese to observe the Development Assistance Committee peer review of DfID last year.
	My noble friend Lady Whitaker and the noble Baroness, Lady Northover, rightly spoke of the need to engage with China to better support stability, governance and growth in Africa. The UK and China have recently agreed to meet at a senior level every six months to discuss international development issues and Africa. We have extended an open invitation to the Chinese to learn from our experience of providing ODA, and the EU and China have agreed to a structural dialogue on Africa.
	China knows that the international community has a legitimate interest in the development of Africa and that this has a wider resonance in China's own aspirations to play a responsible role in the global economy. The German G8 presidency has a focus on Africa and development, and as part of the G8 outreach programme China will be fully engaged on the Africa agenda by all G8 members.
	We have used the high-level dialogue that we have established so far to stress the importance of good governance and sound economic management; to encourage the Chinese, who are strong supporters of the MDGs, to support more directly the poverty reduction programmes developed by African Governments; to take a more multilateral approach; and to join with the international community in tackling poverty.
	We are encouraging the Chinese to endorse the principles of the Extractive Industries Transparency Initiative and to join the Infrastructure Consortium for Africa. At a meeting of the consortium last month in Berlin, held under the auspices of the G8, China participated for the first time as an observer. We very much hope that it will join soon. That is a very good example of the way in which we believe China is moving. At a meeting of the consortium last July, held in Addis Ababa, China sent a third secretary who played no role, but now its engagement is increasing and it really is participating.
	Many noble Lords have spoken of the vast Chinese investment in physical infrastructure. Just this morning, at a meeting in your Lordships' House, the extraordinary Wangari Maathai spoke of the Chinese-financed and built roads in Kenya. The roads are welcome, but cheap labour from China is not. That was graphically described by the noble Lord, Lord Jones of Cheltenham, when he spoke about Zambia and Botswana.
	Transport infrastructure is particularly important for land-locked countries and investment in roads and bridges will help to stimulate further growth between African countries. Although that is an area that is still undeveloped for many economies on the continent, we want to ensure that the kind of infrastructure being provided is the kind that Africa needs, not just the Chinese. We are encouraging both the Chinese and African sides to pay more attention to the monitoring and evaluation of the commitments that the Chinese have made to Africa. We have approached a number of Chinese embassies in Africa and invited them to join established donor co-ordination groups. We are encouraging other OECD countries to have similar discussions.
	China is already having a huge impact in Africa, and it will be increasingly important for development in Africa. That view is shared by African leaders, who understandably have strongly welcomed Chinese trade, investment and aid. However, if we are to achieve our shared objective of making Africa a driving force in the world economy and thus helping millions out of poverty, it is in our mutual interest and to our mutual benefit that we work together locally and globally to that end. The Government will therefore continue to build relationships with China so that the opportunities created by China's rise have the maximum impact on sustainable development and poverty reduction in Africa.

Lord Kingsland: I shall speak also to Amendments Nos. 137 to 139. Amendments Nos. 114A and 129A in the group have been tabled by the noble Lord, Lord Whitty.
	Amendments Nos. 109, 137 and 139, in sum, provide for the delegation of complaints handling to an approved regulator by direction of the Legal Services Board. When such a direction is given, the approved regulator would be empowered to award redress to the complainant, which is currently prohibited by Clause 154. The Legal Services Board would continue to have power to vary or withdraw a direction although, in deciding whether to give, vary or withdraw, it would be bound to act compatibly with the regulatory objectives of the Bill.
	The intended system is described in Part 6, which sets out provisions for the establishment of a new independent complaints-handling body, the Office for Legal Complaints—the OLC. The OLC is not the first port of call. All legal service providers will be required to establish an in-house system for dealing with complaints. If that system responds to the complainant satisfactorily, matters will end there. If not, the second stage is activated, and that is the stage that involves the OLC. It will consider complaints that have not been satisfactorily dealt with by the in-house arrangement. Under Part 6, it is intended that the OLC will investigate consumer service complaints, but will refer complaints about misconduct to the approved regulator. However, as the Bill is presently drafted, the approved regulator will no longer have the power to award redress, even in respect of complaints about conduct. This structure is of particular concern to the Bar, which considers it inappropriate.
	The vast majority of complaints against lawyers concern solicitors. That is not really surprisingsince there are about 115,000 solicitors, but only 14,000 practising barristers, and solicitors are most intimately involved with clients; so one would expect the volume of complaints to be higher. However, the proportions are startling: something like 85 per cent of complaints are about the conduct of solicitors. The number of complaints against barristers is typically well under 1,000 a year, and the total cost to the Bar for dealing with them is little more than £500,000 a year. The Bar estimates that, in future, complaints will account for no more than about 3 per cent of the work of the OLC.
	The principal difficulty about complaints against members of the Bar is that in about three-quarters of cases it is extremely difficult to distinguish between complaints that involve inadequate professional service and complaints that involve misconduct. We share the Bar's view that the approved regulators should be in a position to deal with both aspects at the same time. There are a number of reasons for that. It is inconvenient for consumers to have to deal with two different bodies regarding different aspects of a single complaint. It would also be confusing, as the noble and learned Baroness, Lady Butler-Sloss, pointed out at Second Reading, if one body accepts the facts to which the complaint related but the other did not. In any case, there is bound to be duplication of work and the potential for inconsistency of treatment.
	There can be no question about the high standards that the Bar has met so far in dealing with complaints. That has been endorsed on more than one occasion by the Legal Services Ombudsman. She was reported, for example, in the Lawyer of 20 March 2006 atpage 18 as saying:
	"There are substantial delays in the way the Law Society handles its casework. The Bar Council is better at it. I think the Bar Council continually tries and reviews and improves on its processes. Invariably I find it does what it has said".
	The Legal Services Ombudsman in her annual report for 2005 said that the Bar Council achieves a very high rating from her office,
	"one that is substantially higher than that of other professional bodies".
	She concluded:
	"The Bar Council seeks to ensure not only that it is complying with its own procedures, but that it offers a fair, consistent and good-quality service generally to the consumers who use its services".
	Those findings were again echoed in her most recent annual report, when she commented that:
	"The Bar Council continues to deliver good results in respect of speed of service"
	and that the number of investigations with which she is satisfied has risen to 88 per cent.
	Apart from the high quality of the disciplinary service that the Legal Services Ombudsman finds the Bar disciplinary authority attains, there is the distinct, though linked, question of cost. At the moment, a very substantial input into the Bar's investigation is made by well established qualified barristers at no cost to the investigation. By contrast, if the investigations are undertaken otherwise, it will often be by persons who are not legally qualified, and who may not be able to distinguish issues which a qualified person would. I believe that the noble Lord, Lord Borrie, addressed that matter at Second Reading. In the absence of the delegation recommended by the amendment, it is clear that the Bar would be involved in a great deal of extra expense. So, in addition to the high quality of the approved regulator in the Bar's case, it will also be a much more economical system to operate.
	Amendment No. 109 is a paving amendment for Amendment No. 137, which will insert a new clause after Clause 139 providing for the delegation of complaints handling to an approved regulator by the direction of the Legal Services Board. Amendment No. 138 will amend Clause 154 to protect the position of consumers whose complaints are outside the jurisdiction of the legal ombudsman's scheme. That is inserted because the Bill excludes any corporate or quasi-corporate complainant from the scheme, which seems to us unjust. Amendment No. 139 complements Amendment No. 137, amending Clause 154(1) to enable an approved regulator to award redress to a complainant, which Part 6 otherwise prohibits.
	In conclusion, I ought to remind the Committee, although I am sure that it already has it in mind, that the Joint Committee recommended that the OLC should have the power to refer service as well as conduct complaints to an approved regulator where it considered it appropriate. I beg to move.

Lord Borrie: I, too, support the paving amendment of the noble Lord, Lord Kingsland, and particularly his Amendment No. 137, which seeks to introduce a new clause allowing for the possible—I put it no higher than that—delegation to an approved regulator of the power to give redress, which is otherwise with the Office for Legal Complaints.
	Dealing with the point that under Clause 154 it is prohibited for any redress to be given by approved regulators in the Bill as it stands, we have—I cast no aspersion on the noble Lord, Lord Kingsland, let alone the noble and learned Baroness, Lady Butler-Sloss—loosely talked about delegation by the OLC. Amendment No. 137 stresses that the whole basis of any grant to the Bar of responsibility for handling complaints is in the hands of the Legal Services Board (LSB). I am happy to talk also about delegation in the loose sense because, if the amendment is carried, as long as the LSB so directs, the Bar—no doubt it will be the new Bar Standards Board, with its mixture of lay people and lawyers—will handle complaints.
	The value of delegation has been put extremely clearly by all those who have spoken so far. The value lies in the knowledge of those who will deal with the complaints, in the expertise and in the thorough high standards, which have been praised throughout by independent people—including Miss Abraham and Miss Manzoor, as the noble Lord, Lord Thomas, has described—as well as the monetary value of having this enormous amount of important work done pro bono by members of the Bar acting free of charge. To the value of the Bar handling the complaints I would add, finally, expedition. That came out particularly in the exposition of the noble Lord, Lord Carlile. It is difficult to imagine another, more bureaucratic body being able to deal so expeditiously with these cases, combining expedition with fairness, natural justice and so on, and handling them in a way that is efficient and effective.
	One of the pieces of briefing that I received recently, about which I was most glad, was from the Law Society. It said that it accepted that its handling procedures for complaints over the years had been abysmal; it accepted the criticism. If this delegation amendment is passed into the Bill, the Law Society will not seek to attract delegation to itself. It knows—if I may put it this way; these are not the society's words—that it is not yet fit for that. I was therefore very pleased that the Law Society has supported the Bar in the view that there should be a delegation power, as is proposed in AmendmentNo. 137, but it has no intention, thank goodness, to attempt to get the delegation itself. I feel that there is a great deal to be said for this amendment, and I support it.

Baroness Ashton of Upholland: I am not sure that I can give the noble Lord that specific information now but, of course, I shall do so if I can. However, I stress the importance of considering the finances of the matter. I completely appreciate that that is an important part of it.
	We looked at the proposition that the OLC would become a postbox, as it were—that it would be the place where complaints were received but then were delegated back. I am discussing it in that context although I accept what the noble Lord says about what is proposed in the amendment. We discovered that the costs are about £12.3 million more than having a single complaints-handling body. I believe that paragraph 6.36 of the regulatory impact assessment that comes with the draft Bill goes through the costings in this context. It would not cost an additional£12.3 million if the OLC was able only to delegate complaints handling to, say, the Bar, but if it decided to delegate to other regulators—it would be completely consistent with the amendments to consider other regulators as well—we think that there would be greater inconsistency in approach and a greater cost. The more that you exempt regulatory bodies from this, the closer we come to the situation that we have at present. So there are cost implications.
	The noble Lord reasonably says that much pro bono work goes on at present. I completely accept that. But we need to make sure that we develop a system for dealing with complaints that goes across the professions. We recognise that there is a variation in quality—I have never suggested otherwise—but not to the extent that everybody can say that they are perfect. We have to consider how we develop the greatest confidence in the new system. We need to build on what has gone before to some degree but recognise that we are trying to set up something brand new. The regulatory impact assessment has cost elements. I am very happy to talk to the noble Lord further about additional information that I do not have with me now.
	The issue of principle is that we are creating an Office for Legal Complaints which will handle all the complaints. It will be able to buy in best-quality expertise from those who have experience of dealing with complaints. It will do so in a way that does not involve the delegation of its decision-making. It will accept responsibility for that decision-making. We believe that that is the right way to go forward. I hope that noble Lords will feel able not to press their amendments.

Lord Kingsland: The noble Baroness made the point about the OLC being the initial recipient of a complaint; but I would put it to her that that does not alter the fact that misconduct will be considered by the approved regulator, and all the observations that noble Lords have made about confusion and expense—not only between decisions made by the two organisations but in the minds of complainants—still stand.
	For all the reasons given by noble Lords, and especially in view of what I regard as—I hope that the noble Baroness will not mind my saying this—the inadequacy of her response, I continue to believethat this amendment should be made to the Bill. Obviously we will not press it tonight; but at the moment it is difficult for me to foresee circumstances in which we will not press it on Report. It is one of the central issues for us—perhaps one of the five or six central issues in the Bill. It is a case of granting a power to the Legal Services Board. It is not obliged to exercise it but it has it up its sleeve, to put the point colloquially. We consider that not to grant this power to the LSB would be to impose a system which was not only confusing and capable of generating conflict but also one which was hugely expensive and, ultimately, to the detriment of precisely the people that the noble Baroness says she is trying to protect. Nevertheless, at this juncture, I have to beg leave to withdraw the amendment.

Lord Kingsland: I am most grateful to the noble Baroness for her reply. I shall look at all the provisions to which she has drawn my attention. I had reached the contrary conclusion; but I shall lookat them again in the hope that her advocacy, combined with the drafting, makes my amendment otiose. Meanwhile, I beg leave to withdraw the amendment.

Lord Kingsland: The noble Baroness may recall that, on the first day in Committee, I suggested that a better approach to the structure of the Bill would be to have a separate set of regulatory objectives for each of the three regulatory bodies:the Legal Services Board, the Office for Legal Complaints and the various approved regulators. The principle for this series of amendments is to remove problems caused by drawing an artificially wide set of objectives to encompass each of the bodies. I refer to Clause 1(1), which contains the seven objectives. At an earlier stage in Committee, I think I said that they were too loosely defined to give specific guidance to each individual regulator and that in some cases the objectives were clearly inappropriate.
	Part 6 deals with the Office for Legal Complaints (OLC). The amendment is designed to invite the Government to consider very carefully what regulatory objectives they should give to the OLC. We believe that the main, if not the only, purpose of the OLC should be to protect the interests of consumers. Its task must be complaints handling and seeking the best result for individual clients. Of course, attention should be paid to the wider public interest in the exercise of its powers, so that has been included in the drafting of the amendment; but the interest of the consumer must be paramount in its case.
	We simply do not understand why the OLC should be concerned with promoting competition. What does access to justice have to do with the OLC? It should be a complaints-handling body. Why give it the power to promote the independence or diversity of the legal profession? Those are matters for the board or the approved regulators. Giving the OLC unnecessary regulatory objectives will give it a licence to act beyond its remit. As well as allowing it to interfere where it should not have any right to interfere, it could jeopardise the exercise of its proper functions. As Members of the Committee identified in earlier debates, the regulatory objectives can conflict with each other in certain cases. If the OLC has to have regard to all seven objectives in reaching a decision, it could end up overlooking or even going against the one objective that has any justified relevance, which is the interests of consumers through the effective handling of complaints. I beg to move.

Baroness Ashton of Upholland: When the noble Lord is thinking about this matter before Report, will he consider the possibility that having one setof regulatory objectives, as Sir David Clementi recommended, with the capacity, through policy statements, to think about different applications and weights in different regulatory parts of the legislation and the different circumstances that will emerge, could be the way forward?